Drawing the Line on Lawyer Fees
At the start of her career as an attorney, Michele Colucci spent a couple of years in Los Angeles working for a large law firm, but found that Big Law wasn’t for her. After a stint as the owner and operator of a small chain of retail stores in the Washington D.C. area, she returned to Los Angeles to write and produce shows for film and television, even co-founding a production company. Her life as a lawyer was far behind her, yet people would still approach regularly asking for help with legal problems.
"All they knew was that I was a lawyer," she says. "It didn’t matter to them that I didn’t have experience with their particular kind of case, they just wanted help and didn’t have a lot of money. I realized there were a lot of people that needed a lawyer and didn’t know how to find one that was right for their case."
Colucci decided to start an online service that would connect attorneys with potential contingency case clients. She didn’t want it to be like other attorney-client matching sites, which she felt didn’t look out for the best interests of consumers. Hers would be free for attorneys and contain no lawyer advertising, which is unusual in the industry. The last several years has seen a proliferation of legal matchmaking sites like SueEasy.com, WhoCanISue.com and LegalMatch.com, which charge lawyers a fee for use.
Colucci created MyLawsuit.com, with software that explains in lay language an attorney’s resume and experience. An example is the Martindale-Hubbell rating—a peer-to-peer evaluation in the law profession that is listed as a combination of letters and numbers. "The average person has no idea what that means," says Colucci. "But with our software, you can scroll over the rating and a bubble pops up telling you what it means and why it’s important or unimportant. I’m essentially letting the client see the lawyer’s resume through my eyes."
Attorneys on the site are encouraged to provide a detailed resume that includes cases they’ve handled and three references; all have to disclose whether or not they have malpractice insurance.
In 2008, after a difficult divorce, Colucci moved with her three young children to Silicon Valley and soon after, found her first investor. Last November her business plan ranked second in the Innovate!100 Pitch Slam contest in Los Angeles. She is now halfway through of a round of financing to raise $1.5 million and the site launched out of beta today, allowing consumers to begin using the site.
MyLawsuit.com aims to disrupt the lawyer-to-lawyer referral process, where attorneys refer cases to one another and get anywhere between 11 to 40 percent of the settlement as a kickback. "I think the referral fee is too rich," says Colucci. Clients who find a lawyer on MyLawsuit.com agree to pay the site five percent of whatever they recover, if they recover. Colucci is encouraging attorneys to pay that fee for the client, since they would pay a much steeper fee to a referring attorney. She received a patent this year for her business method.
The cases posted on the site will run the gamut, from pharmaceuticals, insurance and hurricane damage, to medical malpractice, securities litigation and ponzi schemes.
Yet for all its consumer-friendly innovations, MyLawsuit.com is still a legal matchmaking site and can’t claim knowledge of a participating lawyer’s competency. William E. O’Nell, an attorney in San Diego that handles mostly contingency cases, says although he’s not a fan of large referral fees between lawyers, "at least the referring lawyer is part of the local legal community and knows the reputation and skills of other attorneys before making a referral. It seems doubtful that a website, no matter how well-designed, can replace that kind of knowledge."
And Keith Emmer, an attorney and principal at Startegix, a management consulting firm in New York City that works with many law firms, says clients who need a lawyer with specific expertise will usually go to their family attorney for a referral. "For someone hiring a lawyer on a contingency basis, there isn’t usually a lot of shopping around. They ask a lawyer they know for a recommendation and generally go to that person," he says.
On the other hand, Emmer acknowledges the ongoing commoditizing of the legal industry. Colucci’s site is part of that, although she’s also trying to change the status quo. "Because hers is a different model, referral fees aren’t really part of the conversation anymore," says Emmer. "She’s kind of putting a stake in the ground and saying a five percent fee is enough."
Several hundred lawyers are already signed up on the site and Colucci has 300,000 in her database—attorneys she can contact if a case comes along that meets their expertise. If they want to learn more about the case, they have to join the site. Mark Grotefeld, of the firm Grotefeld Hoffmann in Chicago was among the first group of attorneys to sign on; he’s also on the site’s advisory board.
Grotefeld says most lawyers are slow to embrace change, but like it or not, their potential clients are increasingly using the web to find them. According to data from legal website FindLaw.com and digital marketing research firm comScore, more than 7 million consumers search for legal services online each month.
Colucci says the number of people who have reached out to her already has opened her eyes to what a mystifying law is to the average person—especially when that person has been injured and needs help. "Most of these people were really scared and confused. They felt alone," she says. "And what’s most gratifying to me is the feeling that I am giving them some place to go for help."